The main legal point established in the judgment is that the reopening of an assessment must be based on tangible material and cannot be justified by a change of opinion or blindly relying on information and borrowed satisfaction.

JUDGMENT

Kamal R. Khata, J. - This petition challenges the impugned notice under section (u/s) 148 of the Income Tax Act, 1961 ('Act') dated 31st March 2021 and the impugned order on objection dated 10th June 2022 in addition to the impugned reassessment proceedings for Assessment Year (A.Y.) 2014- 15.

Facts:

2. The petitioner was a director of Cinepolis India Pvt. Ltd., Gurgaon and was assessed to tax in Ichalkaranji, Kolhapur. In 2007 petitioner had collaborated with the Cinepolis Group to set up Cinepolis India and had acquired certain shares and irrevocable vested rights to equity in Cinepolis India. In Financial Year (F.Y.) 2013-14, the petitioner transferred the equity shares and rights in Cinepolis India for Rs.33,55,12,980/- under a settlement agreement. The petitioner incurred an expense of Rs.1,31,87,400/- towards lawyers, Chartered Accountants, Escrow Agents etc. for the said transaction. The petitioner filed his return of income for A.Y 2014-15 on 31st July 2014 whereby the proceeds receipt from transfer of equity shares in Cinepolis India was disclosed under the head 'Capital Gains' and claimed deduction of legal expenses under the head 'Cost of Improvement', the said return was duly processed u/s. 143(1) of the Act. On 11th July 2016 a notice was issued to the petitioner u/s. 142(1) for scrutiny in exercise of power conferred u/s. 143(2) of the Act. By responses dated 23rd August 2013 and 24th August 2013, the petitioner submitted required information and documents with detailed explanation as regards the acquisition and transfer of equity shares in Cinepolis India. The Assessment Officer (AO) accepted the explanation and on being satisfied with the information and documents passed an order accepting the total income u/s. 143(3) of the Act.

3. On 31st March 2021, the petitioner was issued the impugned notice u/s. 148 of the Act to reopen the assessment AY 2014-15. The reasons recorded are as under :

2. Brief details of information collected/received by the AO:-The information has been received from the ACIT., Circle 1(1) Gurgaon vide Letter No. ACIT Circle.1/GGN/2288/2017-18 dated 7/3/2018 has enclosed a letter from the CIT(A), /Gurgaon wherein it is mentioned that eduring the course of appellate proceedings in the case of Milan Saini for A.Y 2014-15 that Shri Deepak Marda and Shri Milan Saini were Directors in them/s Cinepolis India Pvt. Ltd. It was further seen that bothShri Deepak Marda and Shri Milan Saini received amount of ?33,55,12,980/- each during the year under a settlement agreement. IN the case of Shri Milan Saini the appeal has since been decided by the CIT(A) Gurgaon the amount of ? 33,55,12,980/- received by Shri Milan Saini has been held to be taxable under the head Income from Salary. Thus amount of ? 33,55,12,980/- for A.Y. 2014-15 received by Shri Deepak Marda, the assessee is required to be tax under the head income from Salary.

3. Analysis of information collected/received :-

The information received has been analysed. On verification of the information, it is found that during the course of appellate proceedings in the case of Milan Saini for A.Y. 2014-15 that Shri Deepak Marda and Shri Milan Saini were Directors in them/s Cinepolis India Pvt. Ltd. It was further seen that both Shri Deepak Marda and Shri Milan Saini received amount of ?33,55,12,980/-each during the year under a settlement agreement. In the case of Shri Milan Saini the appeal has since been decided by the CIT(A) Gurgaon the amount of ?. 33,55,12,980/- received by Shri Milan Saini has been held to be taxable under the head income from Salary. Thus amount of ?. 33,55,12,980/- for A.Y. 2014-15 received by Shri Deepak Marda, the assessee is required to be tax under the head income from Salary.

4. Enquiries by the Assessing Officer as sequel to information collected as received:-

On verification of the ITBA data, it is found that the assessee has filed returned income for AY 2014-15 on 31.07.2014 declaring total income of ? 32,78,25,700/-